U.S. Securities and Exchange Commission (SEC) Acting Chairman Mark T. Uyeda has instructed the agency’s staff to review a series of past statements regarding cryptocurrency risks and the application of securities laws to digital assets.
The review is being conducted under Executive Order 14192, titled “Unleashing Prosperity Through Deregulation,” and follows recommendations from the Department of Government Efficiency (DOGE). The aim, Uyeda said, is to determine whether current guidance should be “modified or rescinded” to better align with the agency’s current regulatory priorities.
Among the key documents under review is a 2019 staff framework outlining how the SEC applies the Howey test to determine whether a digital asset qualifies as a security. The Howey test, a decades-old legal standard, evaluates whether an investment involves an expectation of profit based primarily on the efforts of others. The SEC’s application of this test to digital assets has long been controversial, particularly amid recent revelations that memecoins are largely exempt from securities regulations.
Another important document that is being reevaluated is a 2021 SEC staff memorandum warning investors about mutual funds with exposure to Bitcoin futures. The letter had previously raised doubts about the maturity of the Bitcoin futures market, citing risks such as market manipulation, liquidity concerns, and volatility. However, since then, spot Bitcoin and Ethereum ETFs have launched and grown rapidly, with assets under management reaching tens of billions of dollars.
Uyeda’s directive also takes aim at end-2022 guidance issued in the wake of several major crypto bankruptcies that advised companies to disclose risks associated with digital assets, particularly those related to custody, liquidity, reputational damage and increased regulatory scrutiny.
*This is not investment advice.
